4/20/2010 @ 12:00PM

Coke Goes Flat For Now

Its one thing when a U.S. company reports that sluggish domestic demand causes its North American business to lag overseas results, but it draws the ire of investors when the combined earnings still fall short of Wall Street’s expectations.

That was the case for
Coca-Cola
Tuesday, when the beverage maker reported first-quarter earnings climbed 23.1% to reach $1.6 billion, or 69 cents per share, from $1.3 billion, or 58 cents per share, a year ago. Analysts expected the Atlanta-based company to post a profit of $1.7 billion, or 75 cents per share. It was the same story with sales, which grew 4.2% to $7.5 billion, from $7.2 billion, but came up short of the Street’s $7.7 billion estimate.

During Tuesdays conference call
Coca-Cola
Chief Executive
Muhtar
Kent
Muhtar Kent
said that consumers have not recovered from the financial crisis and that there still may be bumps along the way in 2010, according to TradeTheNews.com. Coke may also see some volatility in this years earnings and expects the economic recovery to be moderate.

Naturally, Cokes investors werent happy, pulling the stock down 1.6%, or 89 cents, to $54.43, in morning trading. The first three months of 2010 have not been kind to Coke, which has seen its stock slide 4.5%. In a small consolation, Cokes decline was mirrored by its counterparts Tuesday, as
PepsiCo
slipped 0.6%, or 37 cents, to $65.75, and
Dr Pepper Snapple Group
depressed 0.4%, or 14 cents, to $33.95.

As irked as investors are, it would be remiss to ignore the inroads Coke has made in overseas market. Tuesday’s release highlighted double-digit volume growth in emerging markets like India, Vietnam, the Philippines, Brazil, Russia and Egypt.

The story was different on the home front. The company said the weak economy, coupled with an unseasonably cold January and February, led to a 9.5% decrease in sales in North America. Kent attempted to assuage investor concerns about his company’s lagging domestic business, saying it was “taking decisive action to strategically advance our North America business,” but offered few other details in the press release.